Tuesday, March 17, 2009

There are even odds that at one time or another in your life, you will be laid off. How do you prepare for this?

NOTE: I recently found this article on my hard drive. I had written it several years ago, during the dot.com downturn. I think it is still relevant today. --RPB

LAID OFF – HOW TO PREPARE FOR THE INEVITABLE

What to do to prepare for being RIF’ed, downsized, fired, or let go.

The year was 1981, which to a lot of folks seems like an eternity ago. It might even have been before you were born. But to me, it seems like yesterday. My Father, who had for years carefully and patiently climbed the corporate ladder, had just been let go from his job as Vice President of a small automotive parts company. He was 58 years old, and he never really worked again after that.

He was a bit in shock. He had hoped to work for at least a decade or more before retiring. To top it off, he had one son still in college, and another (me) just starting. My college fund quickly became his retirement fund. It was probably the best thing that ever happened to me, as it was a great learning experience and I worked my way through school.

However, not much has changed in the last 27 years. Layoffs, "RIFs" (Reduction in Force), downsizing, or just plain firing still goes on. Often it isn’t fair or logical. And oftentimes, the subjects of the layoff never see it coming, even when they plainly should have.

I’m not sure I can give you advice that will immediately put you back on your feet. However, maybe the following suggestions will help you avoid this problem next time, or make sure there is no next time.

I. "I never saw it coming!"

A pathetically large percentage of people act surprised when they are laid off, when in reality, they should have expected to be laid off sooner or later. If you have your ear to the ground and have an understanding of how businesses are run, you should know exactly when the layoff is coming – and leave first.

Take my Dad. In the late 1970’s business was bad, to say the least. While people moan and groan about "the great depression" I think the inflationary recession of the 1970’s was probably the second-worst economic event of the last century. Jobs were scarce, prices were high, and lots of factories were closing.

My Father’s factory was old and obsolete. Much of the machinery dated from World War II. A strong Union was stifling production and driving wages ever higher. They simply could not compete with their larger U.S. competitors, much less the challenges from overseas.

Today, the factory is closed and has been bulldozed into the ground. It doesn’t take a genius to have seen that coming.

Compounding this was the internal politics of the place. The company was a small, family-owned business. My Father got along well with the elderly owner, who was President of the company. However, the son, who was a competing V.P. of another division, simply hated my Father.

For reasons that elude me (and even my Father) today, my Dad never did the math on this and see the inevitable outcome. Once the owner of the company died, control would pass to the son. The son would have little use for my Father at that point.

And that is exactly what happened. Once the owner died, my Dad found himself out on the street. And in that era, not many companies were willing to hire a 55-year-old manager of a failing parts company. In fact, not many people were hiring period!

The moral of this story is that you should not blind yourself to the obvious. As an employee, you need to keep your ear to the ground with regard to the productivity of the company, your personal productivity, and office politics.

II. Company Productivity

It seems almost comical to hear some of the stories from former ENRON employees, bemoaning their fate when the company went down. They told stories about how working at ENRON was "the best job they ever had" as they could arrive late, leave early, do little work, and still be paid outrageous salaries, given huge benefits, and taken on numerous corporate junkets and the like.

People are all too willing to believe you can get something-for-nothing, and these ENRON employees are a perfect example of this. If your job seems too easy, and you think you are being paid an obscene amount, chances are, you’re right!

If the business plan of the company makes no sense, and the company is losing money or does not appear to be self-supporting, maybe it is time to look for the EXIT sign.

A similar phenomenon occurred in the mid-1990’s with the so-called "dot com" bubble. Hundreds, if not thousands of companies were being formed, based upon little more than an idea and some venture capital. People were saying all sorts of things back then, which in the cold light of the new Century, are clearly nonsense.

"You have to have a good ‘burn rate’", one fellow told me, referring to the rate at which the company was wasting its venture capital. "Profits are a thing of the past", said another, "under the new paradigm, profits mean nothing!". Of course, all of this was just silly talk. Most of these "dot com" companies are gone now. The one’s that survived made "old fashioned" profits just like any other company.

If you work for a company that spouts similar nonsense, start planning your exit now, rather than wait for the inevitable. You are far better off finding a new job while you are still employed than to wait until they turn the lights out and ask you to clean out your desk.

Employers are not impressed by an employee who is so passive that they wait for the inevitable. If you are to be a go-getter, get while the getting is good.

Note also that if you work for a company that can’t explain to you how they make money in 10 words or less, I’d head for the door as well. During the 1990’s I met with quite a few clients who tried to explain their business plan to me in terms of a "new paradigm", "sea change", or the like. Needless to say, I asked them for money up-front.

III. Personal Productivity

This is a tricky topic for two reasons. First, no one wants to think (honestly) about whether they really are an asset to the company or not. Second, as we shall see below, oftentimes layoffs have NOTHING to do with your productivity. Oddly enough, the most productive people are often the one’s RIF’ed or let go.

But it still is an area worth exploring. If you are coming in late, leaving early, and constantly missing your productivity goals, chances are, you might find yourself in the cross-hairs for a layoff. In some instances, department heads are given the option of who they want to RIF from their organization, and if you come across as the slacker, expect to be shown the door.

If this really is the case, take some time to figure out why it is that your productivity is so low. Chances are, it is your subconscious telling you that you are not happy in your work. There is nothing wrong with this, and nothing wrong with you. But it can be a good time to reflect on what it is you really want to do. Oftentimes a layoff or RIF can be a liberating experience, as people are unchained from jobs they really hated anyway.

People often stay on at hated jobs for the strangest reasons. They feel they "need" the job for the money (not true) or out of obligation to family or parents. My Father used to tell me that he hated getting up in the morning to go to work, but did it because "he had to" to support our family. In reality, as I learned, you don’t need a lot of money to support a family – at least not extravagantly. But we will discuss this further below.

Conversely, if you are indeed an asset to the company, don’t be shy about telling people about it. If your program saved the company a million bucks, be sure everyone knows it, without coming across as beating your own drum…too much. As we will see below, politics is probably one of the biggest issues affecting who gets laid off and who stays. If you don’t take credit for your own successes – or worse yet, let someone else take credit – you can expect to find yourself pounding the pavement eventually.

IV. Politics

As I noted above, the main reason my Dad got laid off was politics. The new boss was his former co-equal, and he never liked my Dad when they were co-workers. Now that he was in charge, his first order of business was to put my Dad on the street. Again, how Pop never saw this coming completely eludes me.

You can be the most productive worker in the place and still get laid off if you have no friends higher-up. If you are not any good at playing the political game, this can be problematic.

I was never very good at politics, and in fact, tend to piss people off. My Dad and I are cut from the same cloth, there. It is probably a good thing I am self-employed. I always naively assumed that my superior performance would be sufficient to keep me on board, and for the most part it did. I also realized that in order to stay employed, not only do you have to look good to your boss, but you also want to make sure you make your boss look good – to his boss.

One of the most suicidal things any employee can do is to embarrass his boss in front of his superiors. This does not necessarily mean some social gaffe (although these certainly count) but can be a function of productivity or quality of work.

For example, at the Patent Office, we Examiners were pretty much left alone. So long as we made our productivity goals, we were assured of continued employment. Our bosses (the Supervisory Patent Examiner, or SPE) were rated on the overall Art Unit productivity, along with a number of "hit list" items. Each month, a report was prepared for the Group Director listing those Art Units that had outstanding actions over 60 days old, or other delinquent items.

As an Examiner, if you wanted to curry favor with your SPE, you had to make sure that you name did not appear on any of these "hit lists" on the Group Director’s desk. And it didn’t hurt if your productivity was at least 5-10% over your quota. If you followed these simple guidelines, chances are, your SPE would pretty much leave you alone.

So the basic rule of Office Politics is this: Make your boss look good to his boss, and chances are, you’ll look good to your boss.

There are, of course, always those employees who try to glad-hand their bosses – thinking that they can succeed based upon the old school tie, fraternity network, or some other non-performance indicia. This only works so far, though. My experience has been that the schmoozers and glad-handers succeed only for a little while. When push comes to shove, it is often performance that matter.

V. Pricing Yourself Out of the Market

One problem for older employees (and this probably included my Dad) is that over time, you keep getting pay increases, which are often higher than inflation. After 10, 20, or 30 years, you may be making two or three times as much as the new guy in your department.

Business managers can do math. If you can hire two "newbies" for less money that what you are making, chances are they will. They will get more work out of two employees for less money. And younger employees are going to cost less in terms of health insurance.

For older employees, this can be a frightening prospect. Unfortunately, the Supreme Court has ruled that it is not considered age discrimination to fire an older employee and replace them with a younger one, just to save money. So if you think you can sue to prevent such a firing, think again.

The thing that older employees need to bear in mind is that retirement at age 65 might not be in the cards. You need to prepare NOW for retirement (more about this later) and be prepared to retire early. You also need to keep your ear to the ground (see above) and ask yourself (honestly) if your services are really worth what you are being paid.

Many older workers when laid off eventually find other work – but at much lower salaries. These lower salaries reflect the real market value for their services. This is a harsh assessment, I know, but it is true.

In the past, Unions often protected older workers and their large pay increases, from being laid off. The old Rule in a Union shop, was "last hired, first fired", meaning that older workers (and their higher salaries) were immune from layoffs.

However, economics cannot be denied for long. In the airline industry, for example, new airlines with younger employees, newer planes, and no unfunded pension liabilities are operating at less than half the cost of the older carriers. While Union Rules may prevent the older carriers from laying off employees, basic economics is "laying off" entire airlines – or forcing pay cuts to Union members.

Relying upon some Union extortion scheme to keep your job in place might work – or it might not – or it might not work for long. What we are seeing in the marketplace right now is a long overdue economic correction as laborers who were not a cost-effective asset to their companies are given the heave-ho in mass quantities. Had their wages been reasonable to begin with, we might not have seen this correction.

VI. The RIF Process – It Isn’t Fair.

Understanding the layoff or RIF process is a useful thing to know. The process is rarely "fair" and oftentimes the most productive and valuable employees get laid off, while the slackers remain. Corporations typically are inefficient operations, so this is often the case.

RIF decisions might be made at the corporate level, often by people with no direct contact with the organization involved. The motivation to cut costs might be based upon dire financial conditions. But oftentimes, they are made merely to boost the stock price. Wall Street reacts favorably to cost-cutting.

And oftentimes, it is someone in the CFO’s office who decides who to cut and who gets to stay. Older, higher paid employees are often the first to go. The decision as to who stays and who goes is often out of your boss’s hands. You may have been fired by a computer.

So don’t take the process PERSONALLY. Many people waste valuable time and energy trying to figure out what it is they did wrong, or vainly arguing about how the system was unfair to them. Neither process will help in landing a new job or moving forward with your life.

Again, if you’ve had your ear to the ground and monitored your company’s financials, you might have been able to see this coming. If you are an older employee drawing a heavy paycheck, you might find yourself the first to go.

When I worked for a major Air Conditioning company, we had a periodic RIF that took out one of my favorite Engineers. He was a kindly older man with years of experience and high productivity. He also was fairly well paid. His competition in another lab was a younger fellow with no formal training who kept all the test room schematics in his head. His work was often substandard and slipshod.

To an accountant at the main Office, however, it appeared we had two Engineers on duty with the same job description. Why two? From their perspective, one should be let go, and the one they chose was the older, more highly paid Engineer.

I thought this was unfair and short-sighted, of course. But over the years, I’ve seen this same decision repeated over and over again. I don’t expect the system to change much in the future. And trying to change the system is fruitless and does little to advance your personal goals.

VII. Avoiding the RIF

The first thing you can do to advance your own personal goals is to take steps to avoid the RIF or layoff in the first place. Oftentimes this means leaving your company before the inevitable happens.

The old saying is true: The best time to look for a job is when you already have one. If you are already employed, you come across as more confident to the employers you interview with. In addition, since you already have a job, they will have to pay you more in order to entice you away from your existing job. It is a win-win situation for you.

If you wait until you are laid off, your resume is marked for life. Periods of unemployment between jobs are always a red flag for many employers. If you are unemployed and looking for a job, employers can sense your desperation, and its stink is a turnoff. And employers are not going to offer top dollar to someone who desperately needs a job.

Despite this basic common sense, most people don’t bother looking for a job until they are fired or laid off. As noted above, if you have your ear to the ground, and understand the politics and your situation with a company, you’ll know when it is time to look for a new job.

This may depend more upon "gut instinct" than anything else, but here’s a few indicia I’ve used to know when it is time to hit the lifeboats:

1. Do you get along with your boss? This is an easy question to answer, but many people don’t want to think about it. If your relationship with your boss is one of bitter acrimony, start job hunting.

2. How is the company doing? Do you read the quarterly reports? Is the company profitable? Are profits increasing or decreasing? Is your division an asset or a drain to the company?

3. How’s the market doing? Are your company’s products and services in demand or slackening? Is there competition from new low-cost competitors or overseas companies? What is the long-term forecast?

4. Is your company merging or being taken over? Mergers and takeovers are usually followed by layoffs. When consolidating two companies, the primary reasoning is to reduce overhead by consolidating departments. While it may take 2 or 3 years for the accounting departments to be merged, it will eventually happen, and the number of people needed will shrink.

5. Are you happy at your work? This is the big one. If you dislike your work, chances are it shows in your productivity and quality – and in your political connections at work. No one wants to work with a "sad sack" and you might be the first in line for departure.

VIII. Preparing for the RIF.

Getting laid off is not something that happens to "other people". Chances are, in this economy, it will eventually happen to you. Eventually you will likely price yourself out of the labor market for your services, and you will be let go long before you are prepared for retirement. Like my Dad, you might find yourself retiring a decade or more before you are ready to.

This is such a bad thing? I think not.

The key is to prepare for an inevitable early retirement, and then hope it doesn’t happen. Very few people do this, and the results can be staggering.

If you’ve been laid off and are young enough to get another job, great (see below). But don’t kid yourself that this next job is a guarantee of anything. You might want to take some steps to change your life dramatically.

Many "salary slaves" get into some very bad financial habits. It is not hard to see why. With a 9-5 job, you have to get up early, shave, put on a tie, fight traffic, spend 8-10 hours in a boring office, and then fight traffic all the way back home. By the time you get home, you are beat!

There is little time left in the day to contemplate one’s finances, balance the checkbook, or make sound financial decisions. If both husband and wife work, this also usually means lots of meals ordered out – with some pretty staggering bills as a result.

The Salaryman also tends to do another very, very bad thing, economically, and that is to view the monthly paycheck as something to be divided up, like a pie, amongst various monthly payments. Your typical salary slave will lease a new car, thinking "I can afford that from my monthly payment" when in reality it is a horribly bad financial decision.

I’ve had friends who made very bad financial decisions and when they were laid off, found themselves bankrupt. Without that steady stream of income, the leased car gets towed away, the over-mortgaged house is foreclosed upon, and the minimum payments on the maxed-out credit cards aren’t made.

If this describes your finances, you need to change many things, and fast. The whole point of working at a "job" is to BUILD wealth, not to SPEND it. SPENDING MONEY IS NOT WEALTH. Wealth is the money you ACCUMULATE, not money you spend on toys and gadgets.

It is not easy to make this transition, but well worth it. Here are just a few suggestions:

1. Max out your contribution to your IRA, 401(k), or other retirement plan. If your employer offers a retirement plan, put the MAXIMUM amount into it allowed by law, not the minimum. If you are not maxing out your retirement account, something is drastically wrong.

2. Cut all subscription services: Cable TV, Cell Phones, TIVO, Satellite Radio, and the like all cost "small" amounts of money individually, but when added up, can run into hundreds of dollars a month. I know some friends who are not very wealthy, but spend over $150 per month on Cable TV. In addition to being a total waste of your life, this is a total waste of your money. You’ll be surprised to learn that people actually lived, and lived quite well, long before the invention of these modern "conveniences". If you can’t cut all of these services, consider trimming at least 50% of them from your budget (or reducing service levels). I have basic cable and no cell phone, and my life is quite fine, thank you (and probably more interesting than the fellow who has all the cable channels).

3. Buy a car and keep it. The most economical way to buy a car is to buy a late model used car with low milage, secondhand. Try to find one from the original owner (perhaps some poor slob who got laid off!) with all the service records, garage kept, and in great shape. If you don’t do your own car work, find a good independent mechanic and spend the money to keep the car in top shape. A well-made car should easily last 10 years or more, which should be about the time you start thinking of buying another one. The biggest waste of money I see the average salary slave make is to lease a new car every 2-3 years. This is the most costly way to own a car, and for the amount of money involved, you don’t end up owning anything. People will try to justify leasing by arguing that it saves on repair costs. But a well maintained car requires quite little in repairs. And the repair costs are going to be far less than lease and insurance payments.

4. Stop buying "STUFF": The average suburban salary slave has a two car garage, but never parks his cars in there. Why? Because it is chock full of CRAP. Americans are addicted to buying. I have several friends who have filled their houses with junk and live like paupers on six-figure incomes. How does this happen? Consumerism has run wild in America, and we are encouraged to buy more and more useless things that we really don’t need. Many of these things are small items, which seem like inexpensive and thus inconsequential purchases that can be easily put on a credit card. However, what ends up happening, once the consumer gets home, is that this junk never gets used (or used properly) and thus ends up in the garage, basement, or spare bedroom. Big offenders here include weight lifting or exercise equipment, small appliances, and clothes. If you are fat and out of shape, walking a mile a day and eating less will correct the problem – for free. Spending hundreds of dollars on a treadmill or some low-fat cooker (so you can eat your way to slimness) is foolhardy. Similarly, "going shopping" to malls and stores without having any specific NEED for any new merchandise is one sure way to max out those credit cards and fill your home with junk.

5. Have a Garage Sale: In that vein, one way to correct this problem is to get rid of junk. Have a garage sale, or sell off your junk on eBay. I have a garage sale (or participate in a neighbor’s) at least twice a year. Things that lie about your house are of no use to you and clutter your life. Get rid of them. If you haven’t used something in 6 months and have no bona fide intent to use it in the next 6 months, SELL IT. This applies especially to big-ticket items like hobby cars, motorcycles, RV’s, boats, jet skis, and the like. People hang onto JUNK out of pride. Sell it now while you can still get something for it.

6. SAVE for big-ticket items: Americans love their mini-mansions, but most of them are completely unfurnished. Why? I already gave the answer above. People can "afford" small junky things but can’t afford big-ticket items like quality furniture. As a result, they fill their mini-mansions with cartons of junk, but not the quality furniture you’d expect in large homes. Rather than spend lots and lots of money on small junky appliances and clothes, save your cash for good quality furniture. Avoid going further into debt by buying cheap, flashy furniture at those stores that advertise all the time on TV.

7. Have a SAVINGS PLAN: In addition to your retirement plan, you should take steps to build up reserves of after-tax cash. If you can start saving, you can afford to pay CASH for a good secondhand car, or that Stickley sofa you’ve always wanted. If you spend all your money on credit card payments, you’ll be stuck buying junk all your life and paying top dollar for it. There are many, many ways to accumulate cash. Have money deducted from your paycheck for the payroll savings plan (also available online to deduct from your checking account). Have money automatically deducted from your checking account every month to buy stocks, bonds, or go into a money market. Squirrel away cash into accounts that are not easy to get at. I put $100 a month into a Credit Unit account in Maryland. I have to drive 40 minutes if I want to withdraw cash from there, so it acts as a disincentive to spending. This is a great and painless way to build up wealth over a period of time. Don’t get discouraged when you don’t see results right away! I know myself all too well. If there is cash in the checking account, I spend it. So I try to put money into as many accounts (stocks, bonds, etc.) as possible so that I don’t see that big balance in the checking account, tempting me to spend, spend, spend!

IX. LIFESTYLE CHANGES

A layoff can be a great time to evaluate your lifestyle. I think for my Dad, it was a time he realized he was spending a lot of money on foolish things, like impressing other people, rather than saving money for himself. That Country Club membership is awfully expensive when you consider how much it costs to play golf on a public course. As human beings, we all seek status, and it is a normal thing. However, fighting that urge can be a very useful tool!

I drive older BMWs, which are also a hobby of mine (if you can use a hobby to save or make money, this is a good thing, as we shall see below!). Some of my salary friends will look down at me because I drive a 10-year-old car, while they are leasing a new car every 2-3 years. But I have managed to accumulate well over $1million in Real Estate equity over the years and over $500,000 in savings. My friends are barely making their payments on their leased cars, and often have pitifully small amounts in savings. So who really has the most status? If you view status as a matter of who has the most shiny objects, I guess they do. But don’t confuse status with real wealth. All my cars are "paid for".

As I noted above, many people stay at jobs they hate because they feel obligated. "If I quit my job, how will I make payments on the Chevette?" People do the silliest things! Staying at a job you hate, so that you can pay credit card bills, house payments, and car payments is a ludicrous proposition. You can drive a secondhand car, live in a smaller house, and buy less "stuff" and still be happy – even happier!

And even family obligations need not be onerous. Many folks are convinced that in order to be a good parent, they must spend inordinate sums of money on child accessories. I am not sure where this comes from! Other than clothing and perhaps a car seat, a child really does not "need" a lot. As a child from an earlier generation, I was quite happy with hand-me-downs, and although I certainly enjoyed fancy toys, I never really "needed" them. Moreover, my parents did not lavish the money on me back then that the average parent does on their children today. I like to think I turned out all right.

One area in particular seems to be an obsession with the middle class. "I have to put my kid through college, and that will cost thousands of dollars per year!" Well if this is so, you have even more reasons to stop spending money on junk and wasting it on cable TV. Unfortunately, what most modern parents do is to put a second or third mortgage on their home in order to put Junior through college. This, to me, is a big waste of money.

College expenses are rising at two to three times the rate of inflation. Why? Because they can. College is seen as the ticket to a continued middle-class existence. Readily available student loans, along with second mortgages make money readily available for school, and thus parents (and students) more willing to spend.

Oftentimes, the child attending school has no idea what he wants to study or why. College becomes little more than an excuse to party – and all that tuition money often goes to waste. I speak from experience here! My brother went to Party-U and did little more than drugs for four years, wasting nearly $60,000 of my father’s money. When my turn came, the well was pretty dry!

This was the best thing that could have happened to me. I ended up WORKING my way though college. Sure it took over 14 years, but I studied what interested me and moreover what I thought would be useful to me. I ended up with a degree in Electrical Engineering and a Law Degree. Useful stuff, not fluff.

There was little time for partying. I recall one of my classmates tempting me to skip class and drink beer and play pool. I told him "no thanks". I had just paid my tuition bill and realized that each class I attended cost me over $150 per hour. I went to all the classes, sat in front, took notes, and asked questions. As a Student-CONSUMER, I wanted to make sure I was getting the most education for my tuition dollar.

And in this regard, many schools, even prestigious ones, fall alarmingly short.

Working at a crappy job so your kid can go get drunk in college is a really bad idea. Instead of doing that, why not sit down with your children and work out a different plan? If you child doesn’t know what they want to study, consider sending them to a State School for the first year or two and then transferring to that expensive "name" school once they decide what it is they want to do. And a student should definitely WORK at a job – not only during the summer, but while they are in school – preferable in a field related to their study. Your son or daughter needs to learn the work ethic early, and understand that what they are leaning in school has real application. Otherwise, you are just throwing money down the drain.

I am firmly convinced that working is the best thing for a human being. If your child learns the work ethic early, I believe they will have less emotional and psychological problems down the road. Schizophrenia, Depression, Drug Abuse, and other emotional ailments often attach to fairly middle class and even wealthy young people in the early college years. I believe this is due in part to their having so much wealth without having to work for it. Their brains cannot handle the disassociation. Let junior WORK for a living – it will be the best thing for him (or her).

Financial Prudence amounts to much more than just a good bottom line for you, too. If you have your spending habits under control, are saving money, and have no major cash-flow requirements (car leases, etc.) you can really do something INTERESTING with your life. You are free to explore options other than a "paycheck" such as self-employment. Moreover, as you are not desperately tied to your job, you will have more self-confidence in your work and work better. Many marriages fall apart over finances. Moreover, financial problems contribute to depression as well as alcohol and drug abuse problems (which in turn cause more financial stress!).

Financial independence means you are your "own man". Periodically, corporations are rocked with scandals where employees do unethical things or fail to report unethical behavior. The reasoning given is always the same: The employee is afraid of being "fired". Because they were worried about their Chevette payments, they let their boss release toxic gas into an elementary school. I have no sympathy for folks who so desperately have to hang onto their jobs that they will stoop to anything. Being your "own man" makes work more enjoyable, simply because you don’t need it.

X. TURN A HOBBY INTO CASH!

Many folks waste huge amounts of money on hobbies, and then complain about being broke. Again, in our consumer economy, people (especially insecure white males, aged 15-35) are encouraged to buy "stuff" as though owning things will impress others. Here’s a clue: owning stuff takes no talent whatsoever. Buying a new Harley does not make you an "enthusiast," it only makes you an owner. Anyone can own things – it is not a very exclusive club. Anyone with a checkbook and a W-2 can join.

If you must have hobbies (and we all do!) try to use your hobby to save money or even make money. Not only is it possible, it is much more of a challenge and can be quite gratifying.

I am quite handy with my hands, and I like to work on things. While I am not a master carpenter or mechanic, I can get by. I enjoy working on cars, and I’ve used this to save quite a lot of money on car repairs. I’ve used my carpentry skills to make literally hundreds of thousands of dollars in Real Estate.

Most folks do quite the opposite! For example, when it comes to cars, many handy folks will spend thousands of dollars junking up a perfectly good car with "aftermarket" accessories, and then let the basic maintenance go to hell. Sure, an oil change is not as "sexy" as some bolt-on "upgrade". But a D-I-Y oil change can save you a few bucks, while the unnecessary "upgrade" (few are true improvements over stock) will simply max out your credit card further.

The same is true for home improvement. Most home improvements add little, if anything, to the value of a home. It is a good idea to maintain your home, and when the time comes, replace your kitchen and bath. But tearing out a perfectly good 5-year-old kitchen because it looks "dated" is not necessarily a good return on your investment. It is possible to remodel yourself into the poor house. Think carefully before spending too much on trying to make a 2-bedroom rambler into a mansion. It may be a better proposition just to buy a fancier house, if that’s really what you NEED.

I’ve taken all that time and energy and put it into investment Real Estate. Since I have no car payments and low overhead (not buying "junk" every weekend at the Mall), I have the time, credit line, and money to buy properties and fix them up. This can be where you can make real money! Bankers won’t loan you money for that foreclosure property if you are maxed out on car lease payments.

I’ve seen others try to "invest" in Real Estate by buying "nice" properties and then paying someone else to fix them up. It is very hard to make money this way! A nice house is already worth what it is worth. Putting more money into it will not make it worth a lot more, and chances are, you’ll pay more for the renovations than you’ll get out.

My personal residence is pretty modest. Most of my friends, when they started making more money, went out and bought "status" houses with 7 bedrooms and 5 baths. Of course, they can’t afford to furnish these monsters. Moreover, when it comes time to sell, they linger on the market longer, and don’t appreciate as fast. Think carefully before you invest in such a white elephant. While it might impress your more shallow friends, wouldn’t it be nicer to have THREE smaller homes, with two of them generating rental income?

Of course, a lot of other hobbies can’t generate a profit for you or save you much money. But you can, at least, keep them in line. I’ve seen a lot of friends spend tons of money on hobbies, only to find themselves broke and less satisfied that when they were still wanting rather than having.

For example, when I was in my 20’s, a friend of mine had an old ski boat. He was quite a water-skier and even though his boat was old and tired, he went out every day and skied. He was quite good. When his Father died, he foolishly spent his inheritance on a new ski boat – his "dream" boat that he had been longing for. Well, although it was a nice boat, it was not as nice as he had dreamed about. And since it was so new and shiny, he was afraid to let anyone else drive it. He stopped skiing entirely and spent all his time waxing that boat.

That was about 20 years ago. I am sure the boat long ago went to the junkyard. Can you imagine how much that inheritance would be worth if he had invested it? And how much more fun we would have had if he had kept that old boat (or bought another used one)?

With any hobby, avoid the temptation to spend more and more so you can impress the other hobbyists as having the "ultimate" car, boat, RV, orchid, cat, stamp, coin, or whatever. It has been my experience that in any hobby group, the fellow (or gal) who is known as the "#1" hobbyist is often the most shallow and sad person. Don’t be like that.

Hobbies can quickly get out of control. A friend of mine has a hobby of purebred cats. These cats can cost thousands of dollars to buy, and because of their inbred lineage, run up thousands of dollars in vet bills. What started out as a reasonable hobby of two cats quickly escalated to four, then more. She still wants to get even more cats, and it is really starting to get out of hand. I have a friend who has a similar problem with large dogs. Everything in moderation!

XI. SO you’ve been laid off – what now?

If you are still relatively young (under 40) there is a strong chance you can still find a new job in the same field at a comparable salary. However, if you are older, you may have to explore alternative careers, take a salary cut, or both.

The steps needed to take in job hunting are well known are will not be repeated here.

The main thing to do if you’ve been laid off, is to use this as an opportunity to change your life, not just your job. Payoff that debt, get spending in control, and turn your hobbies in to profits. Chances are, you’ll reach this point again in life, and you’ll want to be prepared.

If you have enough money saved up, you can retire early and comfortably. If your overhead and expenses are low, you can afford to change careers or take a salary cut. You might be forced to do all of these things, anyway. It is better to have choices than to have them thrust upon you.

XII. My story.

After seeing what happened to my Dad, I was certain that I did not want the same fate to befall me. My Dad made out all right. He had some money socked away (my college fund), and came into a small inheritance. But I think he envisioned having a little more money that he has now when he retired.

I’ve never really been "laid off" from a job as a result. I’ve quit on a number of occasions. In every case, it turns out that I quit before the place went under. I think I try to keep my eyes open and see what is going in a business and figure out if I really belong there. Many of the companies or departments or firms I quit ended up being closed, downsized, or merged shortly thereafter. Friends would tell me at the time I was a fool for leaving, only to call me later and marvel at my foresight.

I opened my own practice back in 1994. While it may not be as "profitable" as some salary job, I don’t have to worry about being "let go" from the company. And layoffs can and do happen to Attorneys – even Patent Attorneys!

I saw this personally at one law firm I was working at. One long-time Associate has worked for the firm for nearly 10 years. He was a hard worker, and was paid pretty highly. Unfortunately, he had no client base of his own, and none of the Partners were really friends of his (Politics, again!). After 10 years, his name came up for Partnership. No one at the table wanted to make him partner, as they could easily hire 2 or 3 young Associates for the salary he was drawing. Since he had no clients of his own, he could be let go with no consequences to the business.

I liked the guy and felt bad for him, and he was a little bitter about the whole deal. He found work with another firm, and that lasted for about 10 years as well, until that firm decided to close that office and lay everyone off. I hope he learned from the first time!

Needless to say, this story told me a LOT about what to expect about firm life. Since I knew that the chances of me befriending a partner were slim, I figured out early-on that law firm life was not for me. The real icing on the cake was when I went to work for another firm (one that I thought would allow me to work in peace!). They sent out a memo informing all Associates that we would not likely EVER be made partner. Moreover, it became quite clear to me that my religion would prevent me from ever advancing in that firm. The writing was on the wall, and I read it. Many of my friends stayed on, only to be let go later.

In the 15 years I have been in practice, I’ve seen a lot of layoffs at the companies I do work for. It is always heartbreaking for me to see one of my inventors leave, and oftentimes, I have to ask them for signatures on Patent documents even after they have left the company. Sometimes, they get a little upset. I can understand this. But since I represent the company, I have to do my job. And moreover, I see the patterns outlined above repeated many, many times.

Many of these laid-off Engineers should have seen the layoffs coming – but like a deer in the middle of the road, they sat paralyzed until the inevitable occurred. And many of these Engineers would try to impress me with their fancy new cars and gadgets – spending all of their hard-earned cash and borrowing more just to have some illusory "lifestyle". While I sympathize with their plight, after a while, you just want to shake them and say "wake up!"

There are no old Engineers, period. Go to any corporation or engineering firm and start looking for white hair. You aren’t going to find it. And this has been the history of Engineering. Layoffs are common. Projects end, and there is no demand for engineering work. You should expect to be laid off, so stop spending that money before you make it!